CITIC Securities: High Oil Prices Are Expected to Accelerate the Overseas Expansion of Leading New Energy Vehicle Companies

CITIC Securities releases a research report stating that the US-Iran war is developing toward a long-term conflict, with the “blockade” of the Strait of Hormuz driving crude oil prices to surge. Sustained high oil prices will enhance the competitiveness of pure electric and low-fuel-supply hybrid models worldwide. Chinese automakers’ technological advantages are expected to accelerate their global market share. CITIC Securities believes that after a deep adjustment in the passenger vehicle sector from September 2025, the current upstream costs for lithium carbonate, energy storage, and other components have been fully priced into sector profitability. They suggest paying attention to the reassessment of the domestic high-quality new energy vehicle companies’ overseas expansion driven by high oil prices, with a focus on automakers with clear overseas growth potential and leading domestic premium carmakers.

Main points from CITIC Securities:

Background: If the US-Iran war develops into a long-term conflict, the “blockade” of the Strait of Hormuz will push crude oil prices higher.

The Strait of Hormuz is a critical transit point for global energy trade. After the US launched attacks on Iran, shipping through the Strait rapidly decreased, affecting oil production activities in the Persian Gulf. According to Choice data, since Iran announced the blockade in early March, Brent crude oil prices have risen from $70 per barrel to a peak of $120, remaining above $100 as of March 16. On March 13, US forces continued strikes on Iran’s key “oil node,” Harek Island, targeting military sites but avoiding oil facilities, which pushed war risk premiums to a historic high of 5%, creating a “shipping insurance vacuum” worldwide. We believe that if the US-Iran conflict becomes prolonged, the blockade of the Strait of Hormuz could lead to sustained high crude oil prices.

Rising crude oil costs are expected to boost Chinese new energy vehicle exports.

According to Choice data, CITIC’s passenger vehicle index saw a significant adjustment from September 2025 to February 2026, mainly due to weak sales in January and February and rising upstream costs of copper, aluminum, memory, and lithium carbonate since Q4 2025, impacting sector profit forecasts for 2026. Unlike other upstream costs, rising oil prices directly affect consumer vehicle costs and purchasing decisions. As seen during the first oil crisis in the 1970s, global market share for Japanese cars increased significantly (according to Marklines, Japanese brands’ market share in the US rose from 4% in 1972 to 20% in 1980). We believe that if oil prices remain high, pure electric vehicles and low-fuel-consumption hybrids will gain a larger share globally. Chinese automakers’ BEV and PHEV technological advantages are expected to accelerate their global market share, with leading companies’ valuations and growth prospects likely to be reassessed positively.

Chinese automakers lead globally in pure electric technology, surpassing Japanese hybrid technology.

According to CAAM data, in 2025, China exported 6.04 million passenger vehicles, up 22% year-over-year, including 2.53 million new energy vehicles (up 106%) and 3.51 million fuel vehicles (down 6%). The growth rate of new energy vehicle exports far exceeds that of fuel vehicles.

Based on Autohome data, taking BYD’s DMi5.0 technology as an example, models like Qin L and Seal have city fuel consumption of 3.0–3.5L/100km under electric assist, about 1.0L/100km better than comparable Toyota models. On highways, BYD’s electric assist fuel consumption is about 0.5L/100km better. In some overseas markets, due to incomplete charging infrastructure, pure electric vehicles require longer-term efforts to expand, but plug-in hybrid electric vehicles (PHEVs) with superior electric fuel efficiency are expected to achieve faster sales growth abroad.

During the overseas expansion in Europe and Southeast Asia, most Chinese new energy vehicle companies initially seek to replace Japanese brands (offering low fuel/electricity consumption and high cost performance). According to Marklines, Japanese automakers’ total overseas sales in 2025 approached 20 million units, with 1.5 million in Europe and 3 million in Southeast Asia, showing signs of decline in competitive position.

We forecast that in 2026, China’s new energy passenger vehicle exports will reach 7.15 million units, up 18% year-over-year, with 3.85 million new energy vehicles and 3.3 million fuel vehicles (up 52% and down 6%, respectively). Especially in oil-price-sensitive markets like Europe and Southeast Asia, Chinese companies are expected to capture market share from Japanese automakers more rapidly.

Risk factors:

• Domestic competition intensifies beyond market expectations
• Incentives from vehicle replacement policies fall short
• Upstream raw material prices increase more than expected
• Geopolitical disturbances lead to lower-than-expected overseas sales

Investment strategy:

At this point, we believe that the negative factors such as rising upstream raw material prices have been gradually priced in, and the market has fully adjusted its expectations for sector performance in 2026. Additionally, we see high oil prices driven by geopolitical factors as a long-term catalyst that could strengthen the long-term overseas expansion logic of high-quality domestic new energy passenger vehicle companies. Companies with clear overseas growth potential in new energy vehicles are expected to be key drivers of outperformance in the sector this year.